tv [untitled] August 22, 2014 7:00pm-7:31pm PDT
flexibility to the proposal in the event there was a recession during that time period. so, i think that concludes my review of our report and i'd be happy to take any questions that you have, commissioners. >> commissioner dooley. >> i was wondering if we know in the low-income workers they're not increasingly not -- no longer able to afford to live in san francisco. so, how can we kind of balance out where their increased wage is going to go? is it going to go to oakland or outlying areas? seems like there will be more people willing to commute for the higher wage into san francisco. >> it is a commonly believed thing that the number of low-income people in san francisco is dropping a the average housing price rises. in fact that's not true. the low-income and very low-income population in san francisco has continued to increase. and when we checked
this spring on some of these industries, the percentage of workers for example in the restaurant industry is as high as it's ever been exciteding 75%. we would completely grape for those workers who don't live in san francisco and who commute in, their minimum wage increase creates economic expansion primarily from where they live and not for the city of san francisco. ~ agree >> any other commissioner comments? commissioner dwight? >> i'd say a lot of what we currently know is it's too early to tell. lots of people are on leases that are going to come due. we're seeing that in the business sector. i'm quite sure that's true in the residential sector. so, i don't think we've seen the full impact of the increase in real estate prices for residents or businesses just yet. i know anecdotally as leases are coming up in the business
sectors, small business sectors that we're familiar with, the rent increases are double if not triple digits. and that is also the case in nonrent controlled apartments. so, i think the problem that i see with the economic projections is that they don't fully account for the effects we're going to see because we don't know them yet and we haven't seen them yet. everyone likes to think it's all rosy right now, yeah, the dooms sayers aren't right because it's not played out yet. secondly, i think that, you know, by all current projections the job growth is going to be most dominant downtown amongst office workers and knowledge workers. they have to fill those high-rises. there are some very expensive buildings going up and clearly the projection are those are going to get filled and they're not going to get filled with minimum wage worker. so, the city is, of course,
projecting and likely to see dramatic job growth. i think that the trade-off we're going to see is that this low -- below income job loss is going to get lost in the noise. and, you know, there is going to be a ripple effect here. what's going to happen is if the small businesses that rely on low -- low-income wage earners either for entry level or just for low-paying jobs because of by the very nature of their low paying, if they can't afford to employ those people, then those businesses will move and they will take with them all of the other jobs that are above those. and, so, the collateral damage in this is we will lose the businesses and the ancillary jobs, the upper level jobs that go with these minimum wage job. we're going to see a redistribution of business in san francisco. sure, there's still going to be inexpensive restaurants, but those inexpensive restaurants are not going to be local entrepreneurs, they're going to be the large national chains that can afford to cost
average. the mcdonald's, mcdonald's isn't going to go anywhere. mcdonald's has hundreds and thousands of restaurants across the nation and the world that they can income average on. what we're going to lose is the individual entrepreneurs, the opportunities for locals to start, operate and own businesses. and a lot of long-time business owners are going to go out of business. we can just write it off to darwinian economics if we want, but they're never going to come back when we have a recession. once you move, you're not coming back. it's done, moved on. i'm over it. and, so, i think, you know, it's going to change the complexion of san francisco. i think it's inevitable. it may not be lamental. it's going to be lamental for those who get forced out of business. i think it's just foolish to think that's not going to happen. and, so, we can do all of the prognostication that we want, but i know on the ground that business owners are planning on how this is going to affect
them and those plans include closing up or moving out. and, so, i am concerned as a small business commission that, you know, we're going to sit by and watch it happen. and i don't think there is any changing this freight train's direction. it's coming, it's going to pass, we all know it, and it's -- so, you know, it's informative to read the studies and consider the prognostications, but i think that, you know, that the future is going to look different. and i think it's going to look less small business, a lot bigger business. you know, i don't think that -- and i think a lot of these people that are going to benefit are, in fact, going to move out of the city and be people that come in from the outside. so, it's unfortunate that san francisco ultimately will not benefit from this rise in minimum wage in a way that we would hope.
>> thank you. all right. commissioner tour-sarkissian. >> thank you, mr. eagan. i have a question about the remi simulation. i'm referring to your slide number 19, which you report that an estimation of 1500 -- 15,270 private sector jobs will be lost by 2019. first, i would like you to explain to me what the remi simulation is and whether it takes into account -- into account all the increases in cost of operation in the city, benefits, sick leave, that may not have been in place in 2004 that are in 2014 or 2014 to 2019. curious to find out whether that was included as well, could have further increased the loss or simulation loss of
jobs. >> so, the remi model is basically a system of economic equations, several hundred economic equations that are set up in which some of the variables in these equations are policy variableses. they're things that our government might want to change, or the things that a government might want to change would affect these things. labor costs, the average compensation rate for industries, are the policy -- are among the policy variables. in the remi model, those are the ones that we changed in this particular simulation. when he we talk about employment effects with remi, we're always talking about the difference between a baseline projection in which the policy doesn't happen and how the economy would evolve differently if you make the changes in the policy variables that we're talking about. so, the 15,000 starts in 2015. it's based on an identical
situation 2014. so, everything that happened from 2004 to 2014 is already baked into the baseline projection, and we're only talking about the difference of increase -- the difference on the city's economy of increasing the average compensation rate for the industries i alluded to in the way that i talked about. >> but then you would have taken that into account? >> yes. >> that's the baseline? >> right. we could have said, you know, we weren't around doing some of these studies before then, but we would have done those in the same way and looked at that difference from the original baseline. but by 2014 that's kind of water under the bridge. >> right. just the full out question, how do you reconcile -- kind of a clarification with the next slide where projections are dramatically different? could you dwell on that a little bit and then explain to me how you reconcile your remi findings with all of these statistics? [speaker not understood].
>> well, i don't think they do say otherwise. i think we're talking about two different thing. >> okay. >> with the remi which is frankly the statistic on here which i think is the most sound, the 15,000 number, because it's not trying to project the future, it's trying -- directly. it's trying to say based on the way the san francisco labor market works, if you raise wages this much, how much less hiring do you have. what's really uncertain is what the future looks like and that's why the economic projections of what's the overall city's economy going to do from 2015 to 19 or inherently are uncertain. when you look at the covers on this, what's really striking is the extent to which some of them think that the city will not grow jobs in retail trade again ~. the city is basically peaked, and not just the city, but the country as a whole has kind of peaked in retail trade and will not be adding people to that industry. edd, on the other hand, is
basically basing its projections off the past over the previous business cycles, retail trade has been a healthy source of jobs in the city and they are projecting the same is true through 2020. and the same -- they're making the same projection for 2000 -- i'm sorry, for personal services. so, the real difference between these projections is around retail trade. to what extent completely separate from the question or concerning the minimum wage is this an industry that's going to grow jobs at the rate it has in the past. i've just been looking at the 2013 job numbers for retail trade-in san francisco. they've just come out in the past couple week. they show about 5% growth in retail trade employment in the city. that's not as fast as some other industries in the city, but it's faster than average for san francisco and it's very healthy job growth. so, i think we're immediately going to see revisions the next time we get those projections that retail trade may be healthier than they would have thought, but i understand the
reason for the uncertainty about retail trade. i think the internet is affecting that industry more than any other industry, maybe outside of the information sector itself. and i understand that there's a real uncertainty there. >> commissioner dwight. >> i'm curious on page 17, this is the estimates of annual increases by sector. and the one that stands out most is manufacturing at the bottom, only increasing at roughly 3% per year. i don't quite understand why it's tracking at less than half the increase in minimum wage. >> the statistics for manufacturing show that since 2009, that sector has really rapid average wage increases he in san francisco. so that now the average wage is around $20 an hour ~. and it will, frankly, for reasons not having anything to do with minimum wage increases,
it's turning into a different activity and it's going to be the least sensitive of any of the industries to minimum wage increaseses for that reason. >> okay. >> commissioner riley. >> hi, i echo commissioner dwight's concern about the impact to small business. so, will you be able to track separately what the impacts are like job loss or increase for the small business? >> do you mean small business as separate from the rest of the economy? >> yes. >> i think we can do that. i would certainly envision doing this type of analysis that i reviewed before for the 2003-2004 experience doing that every year as we phase this in i'm sure we'll get asked this question how accurate was our projections and thing like that ~. and i do believe that we wouldn't have any problem doing -- breaking that out for small businesses. >> thank you. >> any more questions? seeing none, is there any public comment at this time?
seeing none, any other comments, commissioners? you did say that you will be able to track the small businesseses separately? >> yes. ~ >> can you do a projection for the small business [speaker not understood]? >> i don't have the projections that we have are industry by industry ~. they're not size or business based. so, we don't have the forward-looking projections of how much of the job growth is going to be in big versus small business. but one of the things that we would be able to do after a year after the minimum wage increase goes into effect, we could say, well, this is how the overall city's economy grew and these industries, and this is howl the smallman businesses in those industries grew ~. >> commissioner dwight? >> i do want to thank you for all this analysis. i know you put a lot of hard work into this and i appreciate you summarizing it in this effective fashion for us. so, thanks very much. >> thank you, commissioner.
>> thank you. >> yes, i would like to thank you, ted, for those very informative -- i know you guys put a lot of work into it. and as you were going along with your presentation, i had questions and the next thing you answered. very well. >> thank you, commissioner. >> thank you. next item. >> next item is item number 4. we have a presentation and discussion on the history and background of state law ab 2732 and subsequent laws that establish california business and professions code sections 120242, 12024.6 and 12103.5. commissioners, i'd like to introduce to you our, sf law student volunteer wyatt robarts [speaker not understood]. at the commission's retreat,
with the elimination of the committees where we would do the preliminary research looking at some policies that affect policies, regulations that affect small business, what we are going to be doing now is present to you in different stages. so, we have today an introductory stage around the pos system and this regulation. it's not a complete presentation from beginning to end with answers, but to set the stage we are going to be having a presentation from the department of public health at the august 25th meeting with the idea of taking a look at these regulations, is there something we can do. this one in particular i think sort of, as was touched upon, this really affects the retail sector. and as we take a look at the growth of the online retail sector, we're hearing
from small businesses, the regulation that applies to them. brick and mortary is not equally applied in relationship to online. so, wyatt is going to present to you the beginnings of this and feel free to ask questions and provide any direction in term of where you think you would like to -- further information that you would like on this subject matter as we work on this. and then the objective is to develop a policy recommendation to the city, possibly the state around this particular regulation. >> that's great. welcome, wyatt. >> thank you. my name is wyatt robarts like regina just said. i did my research on point of sale legislation at the state and local level and see kind of where we can move from there and what kind of questions we'd have for the august 25th meeting. so, i want to start with state law.
ab 2732 was introduced in 2002 and that was requiring businesses to conspicuously display price and have that price be easily viewable by customers when using automatic check-out system. and the bill won't go into effect until 2017 because [speaker not understood] and the justification behind this bill was that the department of consumer affairs found that one-third of retail businesses he overcharged for sale priced items when using those automatic check-out systems. and then in 2005 there was another bill that had passed to establish authority for counties to inspect accuracy of these point of sale systems in the retail businesses.
~ 2007 and then moving to the local ordinance that was adopted in 2010, and i just want to go through a couple of definitions. just bear with me here. point of sale station means individual and separate equipment a capable of recovering electronically stored price information that is used to charge consumers for the purpose of commodities and point of sale stations, what are we talking about [speaker not understood] but is not limited to equipment that uses universal product code scanners. the price look up codes or any other system that relies on the retrieval of electronically stored information to complete a transaction. and then business locations means each business essentially that use he point of sale stations. the fee structure here is important for the local ordinance. each, each business is charged $75 and plus $14 for every
point of sale system they have and this cannot exceed $773 per each locationedthv and what what really interesting about doing research on the fee structure is that local counties, surrounding counties have different price structures, and san francisco actually fell a little bit lower than some of these, but we also looked at state levels, too, and chicago was very insightful, gave a different perspective. and then we go into that. chicago, it doesn't allow the registration or it doesn't require registration for retail businesses that individually mark each item with the price in their store. and that's not something currently that san francisco has and might be something good to look into for the smaller businesses that have less item and then they just mark, mark
their goods. it's less likely to [speaker not understood] consumers going into the store, everything is priced. so, just something to keep in mind. and retailers need to be certified every four years versus san francisco's every one year. and the cost structure for chicago is $250 for small stores, and small stores being stores that have three or fewer point of sale systems. and chicago says you must not overcharge 4% of the item that are scanned during inspection whereas san francisco ha 2%. so, san francisco requires a 98% accuracy rating on inspection where chicago is 96%. and then online retailers, we looked at the larger retailers because they were the ones that created the need to establish this regulation.
and our local ordinance here in san francisco explicitly cited california business and professions code 12 0 24.6 ~ and that states that no personal firm, corporation or association shall advertise, solicit or represent any means a product for sale or purchase if it isn't intend ited to entice consumer into a transaction different from that originally presented. and that's why we started looking into these larger entities that do business online. first, we looked at amazon, and amazon, even if you add an item to your shopping cart, the price can fluctuate after you have added it. so, the question was does that -- does that entice a customer to add it to the cart to purchase the item and then the business changes that on the
price that what originally represented. wal-mart says they cannot confirm price of an item until after order. and then apple reserves the right to change prices for products displayed on the apple site at any time and it reserves the right to correct pricing orders that may inadvertently occur. so, it seems like this could be hurtful to consumers. the prices can change without them knowing and some of these entities don't need to really do anything about it because they allow themselves that discretion. and also there is a national conference on rates and measures. it is a not for profit corporation dedicated to developing and regulating united states standard for weights and measures. this was established in 1905. and we looked at the director of california division of measurement standards and it's [speaker not understood]. so, it might be good to contact
her to direct some questions that might be relevant for the august 25th meeting that you guys will be having. and then we kind of looked at more questions moving forward, what should we delve into deeper to kind of see if, if this regulation is capturing the intent that it had when we first -- when it was first established. and some of these questions are what is the length of time between registration of a point of sale system and a small business to when it gets inspected. so, we received a few complaints about the fee that these small businesses were receiving and that could be, in part, that they were not getting inspected. and the fee is supposed to be a fee to reimburse the inspection of that business. so, we kind of want to find out how long it's taking, taking the weights and measures of san francisco to go in and inspect
those businesses. second is the regulation unfairly target brick and norte arby'snesses because they are tangible. ~ brick and mortar as i say, the larger entities that sell products online, they may be enticing customers to buy a price that can fluctuate. amazon, for example, when it can fluctuate when it's some somebody's shopping cart. so, we want to into that and if though large entities should be regulated. third, should smaller businesses that mark all of their item be exempt from registration fees. and as i said earlier, chicago does not require registration of these businesses that mark all of their items in store. and then how much discretion does a local municipality in the application of the state law, what discussion if any at the national level is taking place regarding brick and mortar and online. and does the small business commission have additional questions that need to be answered for the final analysis.
and that's all i have regarding the presentation. so, if you guys have any more questions to direct me, i'll do my best to be able to answer those. >> commissioners, do we have any questions? commissioner dwight. >> thanks for your presentation. very informative. my father's company made the first supermarket scanners. i'm very familiar with the -- why this legislation all came to be. in the early days the pricing database was largely manual, so, its was disconnected from the database at the register. so, there was great concern you would see a price on the shelf. check out is different price higher, lower. the concern was you would be checked out at a higher price. in the flurry of activity at a check-out thing like supermarket, things are flying by so fast you don't realize it until you get home. heck with it. i thought it was supposed to be
69 cents a pound and it was 89 cents a pound. don't bother with t. today i think those databases are more tightly coupled at retail. so, i suspect that the differences are far less. and online, the price database directly feeds the shopping cart. so, the opportunity for a disconnect between the price that you see when you're seeing it online on your computer screen and the price you see at check out is much less likely to be different. furthermore, the frenzy of activity is much less online. you're making very discrete choice. they're going into the shopping cart. amazon routinely informs you if something that is sitting in your cart for a long, long time, you actually get an e-mail that says prices of the following item have changed in your shopping cart because they have sales all the time and they are adjusting prices up and down due to all kinds of inputs.
and, so, i think that generally speaking there is not so much abuse any longer. and, so, it's very interesting. i'm not quite sure, you know, how much need to be done in this area as technology moves forward because i think there's a lot of convergence in term of the databases and real-time pricing and all that kind of stuff, but very informative presentation. thank you very much. >> thank you. >> commissioners? commissioner tour-sarkissian. >> i have a question. you mentioned prior to the meeting you noticed a lot of retails, retail stores did not know about the registration. in fact, you're surprised that many of them did not register and they were -- they were
fined for not registering? >> there is a fine. if you look on the legislation online, it lists all the fines. i believe it's either 50 or $100 an infraction. if it's intentional, i believe that to be a misdemeanor. but it what most of the people working at the counters didn't really know about it, like i think safeway within the last couple years was one of the big businesses that got in trouble for charging -- overcharging for a lot of item in their store and now they offer a -- if they overcharge for one item that's over $5, or under $5, they give you that item for free. and if they overcharge an item that's over $5, they give you a $5 gift card. so, it's just like -- these people working the cash registers, looking into that, people are going to the store and know about that, they would ask for their gift card for $5 and they'd be like, no, we
don't know what you're talking about. so, it's just kind of in store, they're not really sure -- whole foods is another business that got in trouble for -- i don't know what the settlement was, but they also were overcharging. and i think it was more weighing their meats and they overcharged a lot of customers and actually got in trouble for that. whereas safeway's fine was 2.25 million. that was the counties in and around san francisco that were paid that settlement -- excuse me. yeah, so, a lot of people working in the stores don't know, don't know about it and i think you made a lot of great points with technology and how -- because the state and local level, all the definitions used by both, the state law and the
local law, they're very similar. i think it's just a question of kind of the biggest issue i see is the smaller, the really small stores that list priceses on all of their items ~ and they just don't see why they should be paying the $75 fee for something that they're not really going to swindle a customer out of, out of an accurate price. >> just for an example, we were contacted by a hair salon who had 10 products and they were required to pay the pos registration fee. so, i think, again, you know, the objective of this is to sort of take a look -- the definition has a pretty broad definition. what was an electronic trsa